keskiviikko 15. helmikuuta 2012

Identifying Starbucks' Customers

Market Segmentation 

So, as I mentioned yesterday, today I’m going to ponder a bit on what would be the best target audience for Starbucks. In order to do so, I thought it would be useful to first segment the market into four different categories, as follows:

1) Teenagers are not Starbucks’ target group in general. Teenagers do not necessarily have the money and if they have, are not as willing to spend their money on a cup of coffee in a nice environment. Teenagers are  also not the kind of customers Starbucks is trying to reach. Even if teenagers are a large segment they do not fit in to the image that Starbucks is creating. In addition they are not high consumers of coffee products in Finland and Starbucks does not advertise to the youth in general.

2) Middle aged to senior citizens is also not a good target segment for Starbucks. First of all Starbucks does not usually concentrate on this segment and especially in Finland senior citizens tend to be very particular about what kind of coffee they drink and what they drink it out off. They prefer porcelain cups over paper cups for example. They are also more traditional coffee users and do not drink that much specialty coffees. Even though this segment is very broad it is not something that Starbucks is searching for.

3) Young urban adults are the segment that Starbucks usually concentrates on. According to Howard Schultz, Chairman of Starbucks, this segment is what the company refers to as its “core customers” –average age of 42, educated, and earning an average income of $90,000. (The New York Times, 2006). This segment mostly uses the kind of services Starbucks offers. Young urban adults are people of diverse income and age groups that have varying tastes and interests. Starbucks focuses on embracing diversity by providing good customer service and also by offering a large base of products that cater to different appeals. This group is also the most willing and interested in trying new products and innovations. By first reaching this target segment it would then be easier to persuade older age groups to try Starbucks’ products.


4) Tourists would be a segment that does not require a lot of resources to reach. Especially during the summer period, Finland has quite a lot of tourists in the capital area. Since the Starbucks brand is internationally recognised it would appeal to tourists.



Target Segment

So now that the market has been divided into four different segments, lets take a better look at the chosen target segment –young urban adults (approximately 18-45 year olds) coffee consumers in the capital area. This targeting would concentrate on consumers that value spending time in coffee stores that offer a relaxing and comfortable atmosphere. They are not only interested in grabbing a cup of coffee but also would like to enjoy the Starbucks experience. For this they would be willing to spend a little over the average price for specialty coffees. Therefore the target segment would mainly concern young adults that have regular incomes. Marketing should be focused on reaching youth customers with varying tastes and interests. Starbucks strives to provide excellent, tailored service and along with its large variety of products the comfortable atmosphere that Starbucks’ stores have, also offers young adults the chance to sit down and relax if they wish. The lifestyle of urban young adults is also typically fairly hectic, which suits Starbucks’ coffee-to-go culture.

So there you have it, a brief market segmentation of the customers of Starbucks. It's been snowing the whole morning outside, so nothing sounds as good as nice warm cup of coffee right now! Have a great day everyone :)

- Kosti (the coffee lover ;)    

Sources:
Dominus, S., 2006. The Starbucks Aesthetics. The New York Times, [online] Available at: http://www.nytimes.com/2006/10/22/arts/22domi.html?em&ex=1161748800&en=74b4f3e958fdeb7d&ei=5087%0A 






 
 
 



5 kommenttia:

  1. Great needs analysis.

    Additionally, I'm interested in the numbers as well. What is the expected market size? How many consumers theoretically fall under this segment of 18-49? What is expected to be consumption of the other segments which will use their services (though not at such large volumes)?

    $90 000 sounds a lot, with the current spot rate, that would be 68 394€ so around 5699,5€ monthly income. How many people actually have this high income? How relevant is this info to the Finnish market anyway?

    I found the notion of distaste for paper cups really interesting. How much do you think Finns will be put-off by the paper cups compared to fine china? Will this be a big issue?

    Next, I would like to hear about your distribution strategy. Where do you think the Starbucks coffee shops should be located? Good old fashion marketing says that the three most important contributors to success are location, location, location ;)

    VastaaPoista
  2. After reading this post, similar types of questions that Karoliina also mentioned came in to my mind. The "young, urban adults" segment sounds pretty vague, the age ranging from 18 to 49 sounds like a very big segment! Furthermore, I would have liked if you would have looked at the segmentation issue from the Finnish point of view a little bit, the "young, urban adults" seems like a segment that can be found in any country but how is it represented in Finland? Could Starbuck's find some sub-segments under that large segment here in Finland?

    VastaaPoista
  3. I agree with Isa and Karoliina, the segment of "young, urban adults" seems to be pretty vague and the post didn't really discuss how this segment is represented in Finland in particular (or Helsinki area). How big is this segment here and should Starbucks actually target some other customer segments as well?

    I believe that especially university students is a big customer group for Starbucks; this can especially be seen in the US where Starbucks is strongly present at campus areas. In Finland (or Helsinki) we rarely have the same kind of campuses as in the US, but I think locating Starbucks close to universities and other schools could be a good strategy. Or what do you think?

    VastaaPoista
  4. Thanks for the great comments! As coffee is something which is drunk by a very wide variety of consumers, thus, our target segment is very large as well. However, as Starbucks strives to promote itself not only as a coffee provider but also the atmosphere of its coffee shops as a relaxing place for people to enjoy a cup of coffee and meet up with friends etc., this slightly limits the target to exclude very young and older age groups. Basically, the young urban adults includes people between the age groups of 18-49 including students as Jenni mentioned but also includes adults who are already in the workforce.

    Concerning our distribution strategy and locations for potential stores, please read the other posts, the information is available there :)

    Regarding Karoliina’s comment on the paper cups, Starbucks offers both paper cups for those who wish to grab a coffee on the go as a “take away” but then also offers the opportunity for those who want to stay in the store to drink their coffee out of a solid cup. We felt that for older generations in Finland, they might prefer to drink their coffee from fine china as they tend to be more picky and traditional coffee drinkers than younger generations.

    VastaaPoista